The 17% return delivered to China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd's (SZSE:000758) shareholders actually lagged YoY earnings growth

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, China Nonferrous Metal Industry's Foreign Engineering and Construction Co.,Ltd. (SZSE:000758) shareholders have seen the share price rise 17% over three years, well in excess of the market decline (4.2%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 13% in the last year.

The past week has proven to be lucrative for China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd was able to grow its EPS at 46% per year over three years, sending the share price higher. This EPS growth is higher than the 5% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd's key metrics by checking this interactive graph of China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd's earnings, revenue and cash flow.

A Different Perspective

China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd shareholders are up 13% for the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 3% per year over five year. It is possible that returns will improve along with the business fundamentals. Is China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd cheap compared to other companies? These 3 valuation measures might help you decide.

We will like China Nonferrous Metal Industry's Foreign Engineering and ConstructionLtd better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.